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SIBLEY COLLEGE LIBRARY 



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{Subject to 'Revision.) 
Presented at the XlVth Meeting, New York, 188G. 

American Society of Mechanical Engineers. 
Advance sheets from Vol. VIII. Transactions. 

CCXXXVIII. 
CAPITAL'S NEED FOR HIGH PRICED LABOR. 

BY W.NE. PARTRIDGE, NEW YORK. 

The labor troubles of employers, both in England and America, 
are largely clue to a wrong theory in regard to wages. This 
theory is so deeply rooted in the minds of both the laborer and the 
capitalist, that it has passed unquestioned from the early days of 
manufacturing to the present. Stated in its simplest form, it is 
this : The less the price paid for labor, the less will the product 
cost. Consequently the manufacturer, when he wishes to lessen 
the cost of goods, first considers the question of a reduction of 
wages. This is an obvious method, within the comprehension of 
any one. It calls for no investigation of methods and involves no 
intricate estimating. 

Among the mechanical trades it is a pretty generally recognized 
fact that the easy way, and that into which the apprentice generally 
falls, is always a wrong way. In the case of wages, no exception is 
found to the rule. A present reduction in wages may for the time 
reduce the cost of the product, whatever it is, but the reaction is 
bad. The Old World stands to-day distanced by America, and ex- 
ceedingly anxious, because wage reduction has been pushed a little 
beyond the point where starvation begins. In spite of having 
thus carried the principle to the extreme, America faces her and 
produces in many lines, for less money and of better quality. The 
reason is that here we have, to some extent, been forced to adopt 
the true theory of work and wages. Our present labor troubles 



y capital's need for high PRICED LABOR. 

largely come from the introduction of Old*- World ideas and Old- 

World methods. The very existence of the trade union depends on 
the wide-spread belief that cheap labor makes cheap products. 

The truth in this case happens to be at precisely the opposite 
pole. The correct theory is, that high priced labor makes a cheap 
product. The manufacturer or employer who carefully considers 
the ultimate success of his undertaking must study how he may in- 
crease the individual earnings of those whom he employs. He 
must seek for the highest priced labor as giving him the best re- 
turns for his expenditure. His problem is to adopt a system 
which shall utilize skill and intelligence. These are imperative 
and universal laws, and apply to all branches of business. 

That high priced wages make cheap goods seems a paradox to 
many who have only considered the other side. The question 
naturally arises, Is this possible ? Has such a thing ever happened, 
and can it happen again ? The answer is, Yes. England has for 
many years held markets on the continent of Europe, in the face 
of the fact that wages were much higher in England. From Eng- 
land, cottons are sent to India and China in spite of the cheap 
labor of the latter countries. 

The view usually taken is that machinery enables the English 
to manufacture so cheaply as to enable them to compete with the 
cheap labor of China. In one sense this is a mistake. Before the 
cheap labor can run the machines, it must be educated and drilled. 
It must become skilled to such an extent as no longer to deserve 
the title of cheap. Skilled labor must be exported to China to 
superintend, if successful cotton factories are to be erected in that 
country. 

Some years since, a manufacturer of presses for making articles 
from sheet metal, advertised his machines abroad, and basing his 
statements on what was habitually done in America, said they 
would run 120 strokes per minute. Foreign purchasers com- 
plained. They could not make half so many articles in a given 
time as he had promised. Visiting the shops in person, he found 
no difficulty in feeding the blanks to the press for minute after 
minute at the guaranteed rate, but he discovered that the cheap 
workmen whom they employed, could not keep up the American 
rate. After that the guaranties advertised abroad were only half 
as large as the capacity of his machines in America. Similar cases 
are within the knowledge of every manufacturer of machinery who 
has an export trade. 



capital's need for high priced labor. 3 

The use of machinery presents the greatest advantages in those 
countries where general intelligence is greatest and skill is most 
common, and where, in consequence, labor is most highly paid, and 
in countries where labor is cheapest, machinery cannot be run 
by the natives. JSTot long since an American engineer in Russia, 
who had been superintending the erection of machinery for making 
oil cans, wandering about Batoum, saw at a distance a hundred or 
more camels receiving loads of a peculiar form, and all alike. Ap- 
proaching lie found a caravan about to start for Persia, and the loads 
were Singer sewing machines — two to each animal. Skilled and 
high priced labor alone has made a sewing machine possible that can 
be shipped halfway around the globe and transported a thousand 
miles upon camels to a land of low wages. Without such labor the 
machinery for its manufacture could neither be built nor oper- 
ated. Could skilled labor be obtained, capital would soon erect 
in Asia the necessary machinery, and save the cost of transporta- 
tion. 

From general cases it is well to turn to those which are more 
particular, in order to demonstrate the advantage and imperative 
necessity of seeking to increase the earnings of labor. Some years 
since, an industry was started in the eastern part of the country, 
which grew to considerable proportions. The distance from con- 
sumers, cost of transporting bulky articles, and high wages, led to a 
transference of the factory to Boston. It was then concluded that 
the cheaper labor obtainable in New York and its advantages as 
a business center would pay for another removal. The factory was 
then brought to Kew York. It was found, however, that both 
changes were for the worse. Fine materials, like ornamented 
paper, silk, satin, scrap-pictures, etc., Ave re employed, and the Avaste 
of these in cheap hands was so great that in spite of higher wages, 
long freightage, and cold, long winters, it was cheaper and best to 
remove the factory for the third time, to the village in Maine 
where it started. 

An example of the inevitable evils of seeking cheap workmen 
happened a few years ago in a shoe shop in the western portion of 
the State. At the regular price for piece-work exceedingly good 
wages were made by the smarter girls in the factory. $25.00 and 
even $30.00 per Aveek Avere paid to single operatives. A large 
number of girls were employed, some able to earn these wages? 
while the rank and file averaged at the time about >{>8.00. Cut 
after cut was made in the wages, because the employers thought thnt 



4 capital's need for high priced labor. 

no girl ought to earn more than £10.00 per week. The result was 
hardly what was expected. The capable women whom they hoped 
to cut down to $10, left them. Only the poorer operators remained, 
the best of whom could earn only $5 or $6 per week. The pro- 
ductiveness of the plant had been cut down in about the same ratio 
as the cut in wages, and the most expert and valuable laborers 
were forced to leave, and quality suffered as well as quantity. The 
profitableness of such an operation is certainly questionable. In 
contrast to this is the testimony of one of our shrewdest and most 
intelligent Eastern manufacturers, that within fifteen years, in sev- 
eral departments of his establishment, systems have been in opera- 
tion which have reduced " the labor cost on certain products with- 
out encroaching upon the earnings of the men employed.'' In 
this establishment records are kept with great care and system, and 
the accuracy of the statement is beyond a doubt. 

It is a fact, known and recognized for years, that in certain lines 
of metal work, goods were most cheaply produced in parts of New 
England where the earnings of the men and wages in general were 
the highest, and the same goods were most expensive to make in parts 
of the West where the daily earnings were only a third as large. 
The facilities were equal. A manufacturer, in speaking of this, 
said, "My men are respectable citizens and property owners, with 
children who will go through the high school, and perhaps through 
college." He characterized those of another section as but one 
remove from the day laborer, and of no account socially. 

The workman who earns large wages is valuable to his employer, 
because he returns a large product for a given outlay. Such a 
sale of labor is in one sense a wholesale transaction. When two 
men sell a dollar's worth of labor, the buyer rarely expects more 
than 90 per cent, return, while if one man performs the work, 
something over 100 per cent, would not be unusual. When the 
earnings are large in proportion to the number of workers, the 
value of the plant, as well as of the product, is increased. Cases are 
on record where an increase of the earning power of the men has 
been equivalent to an increase in the capacity of an establishment. 
Men who earn large wages become property holders ; they are re- 
spected citizens, conservative, self-respecting, intelligent and tem- 
perate. Their children do not grow up to swell the criminal 
classes. Such citizens are a valuable purchasing power in the 
land ; their prosperity is of a stable character. Men of this class 
have no labor troubles; they have too much at stake and are too 



CAPITALS NEED FOR HIGH PRICED LABOR. 5 

well assured of the necessity of continued work, and too successful 
in it, to take part in strikes. 

Manufacturing can only be prosperous through long periods in 
large, thrifty communities, where the average income of the masses 
is high, and where wealth is widely distributed ; under such con- 
ditions, consumption is enormous. The tax imposed by poverty 
bears lightly, because there is no poor class — no pauper labor. 

It must not be understood that the suggestion of high wages 
means that the manufacturer or employer should at once make an 
advance in the wages paid, or increase the price of piece-work. 
Such a course is disastrous alike to employer and men. Advanc- 
ing prices without a corresponding advance in earning power, re- 
sults ultimately in a permanent decline in earnings. This is a 
rule which appears to have had no exceptions in this country. It 
is a result greatly to be feared. 

In Great Britain a strange thing has happened which may be in- 
terpreted in many ways. As the price of wages in the great iron- 
producing establishments has been reduced, so has England begun 
to feel Belgian and German competition. This has often been 
looked upon as a case of cheap labor against that which is higher 
priced. Others take the ground that it is the irrepressible conflict 
between machinery and man ; in which they say that man must 
be ground to powder if machinery is tolerated. Examine the case 
a little further, and it will be found that it has been a contest of 
machinery alone. In such a contest, the latest comers, and those 
having the most capital, are always winners. Belgium and Ger- 
many had only to construct superior plants, and employ as much or 
more capital, and they could command the markets of the world, 
the natural facilities being nearly similar. The only reply to this 
attack was to reduce wages and increase and improve the machin- 
ery. But the Belgians could reduce wages even more easily than 
the English, and the improved machines of one country could be 
duplicated by the other within a year or two. 

Had the English iron-masters turned their attention to the im- 
provement of their labor, as well as their machines; had they made 
one Englishman in their iron works as good as three Belgians, 
competition would have been extinguished. They had not learned 
a lesson which the ship owners of the last generation could have 
taught them ; that one English or American sailor was worth two 
of any other nationality, and English and American ships, though 
paying high wages, cost less to handle than those of other nations. 



fi CAPITAL'S NEED Foil HIGH PRICED LABOR. 

They habitually sailed with fewer men and with greater safety and 
more profit. Labor of a high class cannot be exported ; it is not 
duplicated by capitalists of a foreign country, and it is exempt from 
competition of machinery or men. 

The general problem which the employer of the present day in 
this country must solve, is a simple one in its general form. It is 
to increase the earning powers of his men from year to year, and 
to do it in such a way that the men not only earn more, but are 
more profitable to him. Though simple as a general statement, it 
becomes complex when applied to individual industries. The 
method which has been employed in a single instance will serve as 
an illustration of how the problem may be attacked in relation 
to piece-work. In a large establishment in Pennsylvania, embrac- 
ing a great variety of trades, piece-work is almost the rule. When 
a man devises any method by which a saving of time, labor or 
material is effected, he calls for a trial of the improvement. 
When it is found successful, a new schedule for that class of work 
is made and the price is reduced, but the men get one-half of the 
gain and the establishment the other half. Cost of production has 
been reduced and the earnings of the men increased. This stimu- 
lates every man to study processes and machinery. Every motion 
is criticised ; the operation of every machine watched with the 
utmost care by intelligent and interested eyes. Ambition is at 
work, there is an incentive for men of skill to stay, because they 
feel assured that there is an ultimate market for what they have to 
sell. Every man is as interested in cutting down the price of 
piece-work as the proprietor himself. Under this system no limit 
is placed on the sum a man may earn by piece-work. The higher 
the wages the more profitable is the plant. 

When improvements in processes are designed in the office or by 
the heads of departments — that is when they may be said to origi- 
nate with the proprietor — the establishment takes-two-thirds of the 
saving effected, and the men one-third. It must be understood that 
such tools, appliances, or alterations in tools as may be needed to 
introduce improvements, are made by the works, for the men ; hence 
a man when he has designed an improved method of doing his work 
is not at any expense in demonstrating or introducing it. How 
profitable this system has proved for the works can be judged from 
the fact that a few years ago the labor on one article cost $6, and 
IS months ago the same thing, in an improved form, was being 
turned out for $2.50. The men at the latter price were earning 



capital's need for high priced labor. 7 

higher wages than before. This method is capable of being 
applied in many lines of business. In some it has a wider range 
than in others, but it is profitable in all. 

The underlying principle, however, is applicable in every line of 
business, and the employer will find it profitable to enlist upon his 
own side, and virtually take into partnership with him, the hope, 
ambition, and self-interest of his men. 




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